This is not an orchestra economics post...

One of the more salient contributions of cultural economics to the field in general is the formal conceptualization of "addictive preferences," or in non-academic terms, acquired tastes. Tastes for the arts, and fine arts in particular, often fall into this category because demand for these goods increases with past exposure. This has been shown both in individual case studies and in audience segmentation studies.

This is where all references to cultural economics stop, since I'm actually here to talk about another addictive preference today: alcohol! Specifically, how the hell did I become a whiskey (whisky for the Irish) man? Like the arts, whiskey drinking involves a lot of patience, experimentation, and in some cases, failure (do NOT buy Grant's unless you want to study last night's dinner!). What puzzles many is that whiskey, frankly, tastes kind of shitty the first time you have it; why go through so much work when there are clearly greater opportunities for pleasure? Even if you, the newbie (assuming you're one of my regular readers), were to sip the finest 30-year single malt, you wouldn't have the taste buds to make a clear, articulation distinction between this ostentatious luxury and a bottle (or as those collegiate plebians call it, a "handle") of Jim Beam.

FYI, Jim Beam's aftertaste resembles a mouthful of canned corn. Malts don't.

My only answer is that the process of experimentation is an investment to a much greater return. Nobody asks, for instance, why a dorky male would try so hard and fail multiple times to lose his virginity when there are easy substitutes out there (porn). Or why an investor would continue to work his money even though his past ventures have evaporated a small fortune (ok, some do ask). Put simply, however, the reward justifies the means.

This still begs the next question, though: how in the world could I possibly know that whiskey will be a good reward? This, I can only blame instinct. Maybe its an inherent appreciation for the subtle - I am an arts guy after all. Maybe I prefer the classy, yet masculine social context of whiskey over the trampling testosterone of beer and the starving, frigid revolutionist of vodka. But the reasons are buried in my subconcious. Who knows. Time for another glass of 'fiddich.

Farewell, ASA

Don't let the title mislead you. Despite the good times, I am not here to reminisce about my two years as an ASA officer.

No, this article isn't about me (despite my promise in the my previous post mere hours ago). This article is about Duke's Asian Students Association as an organization, one that has not looked out towards its environment in ages and suddenly finds itself immersed in unfamiliar waters. This article is not a targeted rant at any past leader, since the underlying forces that have led to this current state have creeped stealthily off the radar, and old initiatives that worked in the past still seemed to work, albeit with dropping standards and efficiency every year. Rather, this article identifies how a changing Duke no longer allows the ASA to be what it once was, and it prescribes solutions that may fix the current problem. None of these solutions can involve keeping the ASA in its current form and mission, though; this is why I say farewell today.

What's at issue here? Put simply, the ASA has little power to create a constituency on campus. The idealized ASA wants to focus on four pillars: social, cultural, political, and community. Each pillar has a specific goal, yet the organization is no longer able to adequately acheive these goals. Two forces have been at work here:

1.) The rising Asian population at Duke. Once a school with fewer than 10% able to claim Far Eastern descent, Duke has recently shifted admissions policies and now welcomes freshman classes with over 30% Asians. On the surface, this seems like a good thing for the Asian Students Association - more "constituents!" Many will argue that Asian students have a tendency to self-segregate, and consequently more should self-segregate within the umbrella of the ASA. With a small Asian population, this may be true, as Asian students find a degree of familiarity and empathy with other Asian students they cannot find anywhere else, and having an organization to facilitate making these connections makes sense. A larger Asian population, though, means greater segregation within the race. With so many Asians around, it no longer makes sense to make friends solely because of race. Other factors like ethnicity, active interests, hobbies, or religion play a much larger role in creating communities than race. As an exercise, imagine yourself (if you're Asian!) in a small town with two other Asians - you're much more likely to be friends with these two specific individuals than if the town consisted entirely of Asians. To put it obviously, there's a greater chance that you'll find Asians with interests and personalities more compatible with yours in the second scenario. And of course, with a larger population, theres also a degree of backlash against self-segregation, and you'll find many Asian students who are thoroughly disgusted with the idea of a racially-segregating organization in the first place. This leads to the second force:

2.) The rise of student groups. From 2005-2009, the number of student groups on campus has doubled. Many groups are able to form close, involved communities. IV, for example, thrives on members' religious connections, while groups like the Taiwanese Students Association and the Thai Students Organization can unify members based on their ethnicity and country of origin. These groups are thus much more attractive to different students than the Asian Students Association, which has no unifying power besides race. The recent emergence of groups like the Chinese Students Association only further compounds this competition for membership and involvement.

These forces have profound consequences for the ASA's ability to complete its goals.

A.) Community. In the past few years, ASA execs have found it increasingly difficult to attract interest towards the organization, either through freshman events or through engaging an older population. Start-of-year programs, whether under the guise of FAMLI or big-little siblings, ultimately fail because freshmen have better alternatives than to get involved with an organization that connects little with them. I often hear opposing arguments that there are pockets of success within these programs, that there are instances where dedicated upperclassmen befriend freshmen who ultimately get involved with ASA. This argument is equivalent to saying that GM is a successful company because it sold a car to my uncle. Of course, there are freshmen who may come to ASA meetings at first and seem genuinely interested in ASA. Most of them stop caring once officer elections are over. There are also freshmen who make friends with upperclassmen because of shared hobbies or interests. This means the ASA is irrelevant in the scenario. Yes, the ASA program might have created the friendship, but no, it is neither the purpose of the program nor is it to the benefit of ASA. I've only talked about freshman community in this argument so far because any upperclass community generally consists of execs + which friends they could pull in that day. By that age, most people are already turned off.

B.) Cultural. Outside of LNY, other cultural groups take away some of the ASA's monopoly over cultural events. Some events, like hot pot night, still succeed heartily, while others flop. This is because increased cultural competition forces events to become more interesting and relevant to students' preferences. Simply offering culture, in other words, is not enough; the culture offered must be able to attract students. I know this is common sense, but it hasn't always been used, and I suspect this is because ASA sometimes believes it still owns a cultural monopoly.

C.) Political. Groups like DEAN and Common Ground who specialize in political discourse are able to provide quality events that easily compete with ASA's offerings. Furthermore, with a disparate Asian population as described above, there is little demand for ASA to serve as a "representative" organization. In other words, this is why we don't see a "white students organization" speak up whenever there is reverse discrimination. Yes, the BSA is a counter-example to what I've just argued, but lets face it, African-Americans unify more as a race because of historical factors, factors that do not influence the Asian-American population.

D.) Social. ASA is able to attract a certain population to its social events if the event itself is attractive. Again, this is pretty intuitive. Again, the rise of new student groups and the segmentation of the Asian population means that quality is more important than ever, and that simply being the hot spot for Asians doesn't cut it anymore.

What kind of role, then, fits the ASA in this kind of environment? Many have argued that there is no longer any need for an Asian Students Association. I disagree, there are several advantages an ASA could have that other cultural organizations may lack.

Scale - ASA can produce large-scale events like LNY, major charity drives, and high-profile speakers (ex. Russell Peters) because of its large scale and budget. The task would not be as approchable for individual cultural groups, both due to money and due to the number of acts related to their own culture they could field. It is much more efficient for a central organization like the ASA to oversee the production of these programs. The ASA's scale is also helpful in lobbying for Academic initiatives like an East Asian studies program.

Scope - Although East Asian cultures are unique in themselves, they share close similarities that are missing in other cultures. Therefore, great possibility exists for cross-cultural inquiry or collaboration. For example, a disaster relief project by the VSA may want to expand its reach to other East Asian cultural groups. In these cases, an organization like the ASA can advantageously move to increase communication among cultural groups or facilitate partnerships between them. ASA's inclusive scope also means that it can serve as a conduit of communication between Duke administration, student government bodies, and East Asian cultural groups.

A successful ASA, therefore, depends on its ability to a.) create successful cultural, academic, and social programming, and b.) foster communication and collaboration among ethnic or cultural student groups. Creating an "Asian community" within the general student body is irrelevant in this new environment; there is no market for such a product when there is no demand. In fact, focusing on programming rather than recruitment may help overall involvement in ASA, as the door opens up towards those who have broad interest in Asian cultures, not just those of Asian descent. Likewise, "representation" of the Asian population at Duke does not work when the population does not see itself as part of the ASA.

How to approach this rebuilding is the task of the new executive board. The personnel quality is there, but the temptation of reverting to status quo always remains.

From D-town back to D-town

I'm such an infrequent blogger, and when I do write I tend to produce analytical articles detailing the sustainability of symphony orchestras or the mental processes behind musical performance. It's difficult for me to separate my passions from my daily life; even the simplest logic will thus lead you to conclude that I am, indeed, a pretty big dork (+1 for using a semicolon!). But obviously, life isn't all about Baumol's Cost-Disease, and for those of you who care to follow up with me, I know that these Additional Pylons have been a bit of a disappointment.

To that end, I've decided that I Must Construct Additional Pylons into a more personal space. Of course I'll have plenty to write about music, as you would probably expect, and of course I'll talk about things like organizational strategy and education management (it is my job after all!). But since you are presumably reading this blog to keep up with me, Yi (Ethan) Xiang, you'll get what you want - plenty more of me (in a non-pornographic way).

So what's been going on here in the humid confines of Duluth, Georgia? Not too much. My daytime consists of long exercise routines at (much too) sunny Pickneyville Park or in the ultra-modern, renovated YMCA weight room. That is usually followed with some reading and GMAT studying. At night, I might go out for a drink or a mini-adventure with Matt, and of course, there's lounging around with the guys in channel scu. I've been on some interesting expeditions since graduation, however, from learning to ride a trotting horse in south Georgia to gathering 60 pounds of old, unused clothing in my attic for the local donation center (my, have I grown. and shrank. and grown again).

A few more events of note:

1. The Blattella asahinai has found its way to Georgia! The Asian Cockroach, that is. Has wings, can fly, attracted to light. Most of the time, you have to look out for roaches - they run away from light and hide under cracks. But the Asian Cockroach finds YOU! As you may be the only source of light in your otherwise energy-saving household, this guy will nonchalantly hover into your office room and select your laptop as its landing pad. Asian roaches also have higher armor upgrades than their American counterparts and are resistant to concus- er, chemcal damage. Not that my house is a roach lounge or anything; these things just happen more often when you live near the forest.

2. Been working on some video game music. The biggest challenge, to me at least, is that game music is more catchy than interesting. An interesting harmony is full of surprises and leads to a musical conclusion in unexpected ways. Example: "I Dreamed a Dream" from Les Miserables, when the tune modulates from Eb Major to F minor! ("But the tigers come at night...") In contrast, a "catchy" tune is almost always, in musical theory language, I-VI(IV6)-IV(II6)-V-I (ex. "Bleeding Love") or I-V-VI-III-VI-I-IV-V (canon in D). Although less frequent, there are of course other patterns, and I ultimately went with something a little jazzier. Stay tuned for more news on the product.

The Economic Disease of American Orchestras (Part I)

This is Part I of a two-part series. Part I focuses on defining and challenging the cost-disease, while Part II examines its strategic implications for symphony orchestras.

Part I: What is the Cost-Disease?

If cultural academia proves accurate, then the fine arts, and symphony orchestras in particular, may be more outdated than anybody once thought. Although they have not degraded culturally or artistically, their business models seem less and less sustainable every year. We often hear how orchestras struggle to pull in audiences; demand has not kept up in a world with modernizing musical tastes. Yet this is only part of the story. Just recently, an Andrew Mellon Foundation report found that even if the average symphony were able to fill all of it seats, it could not recoup enough revenue to match its costs. Intuitively, this seems like a problem, yet we are reminded that nonprofits by definition do not make money. The longtime symphony observer will note that orchestras can fill the gap with various private and public funding mechanisms. But the problem is, orchestras were more self-sufficient in the past!

Baumol and Bowen studied this long-term trend in the 1960s. They found that the fundamental problem with performing arts was that the sector had little productivity increase; an orchestra in 1900 cannot perform a Beethoven symphony any more efficiently than an orchestra in 2009. By constructing an economic model that distinguished the productive and nonproductive (including the arts) sectors, they discovered that rising productivity led to higher wages in both sectors. Cost of living increased across the broad spectrum, and the nonproductive sector found itself mired with higher fixed costs every year. On the other hand, while the productive sector saw increased revenues from higher productivity, the nonproductive sector’s revenues remained relatively flat (relative demand does not change in this model). Ultimately, this led to less production (read: fewer concerts) in the nonproductive sector as managers substituted away from the arts toward more productive activities. Baumol later revised the model and found that production could indeed increase due to the income effect (performing organizations put on more shows to try and recoup income), but that revenue nevertheless accounted for a decreasing fraction of costs, and in particular labor costs.

Empirical evidence since that time suggests that costs have indeed risen faster than revenue. Many orchestras today will admit that they have this problem; though some fault may go towards aggressive labor unions or guest artist agents, the underlying problem cannot be denied. Performances have increased overall due to the founding of many more orchestras (with some federal and state funding solutions) as well as the increased support of private and corporate philanthropy, which is generally a good thing. Yet, with rising costs, is it possible for all these new orchestras to stay in business? Can private philanthropy continue to patch up an ever-widening gap between costs and reveues? Can demand somehow increase enough to bridge this gap?

Of course, the cost-disease theory has its fair share of objections. Some point out that labeling the arts as a “nonproductive” sector is a mistake; there are constantly new product and process innovations. While I believe that this is true of the sector as a whole, the classical arts, and especially symphony orchestras, do not readily reap these gains. The rise of recordings, for one, has been touted as a productivity innovation. Yet the benefits of this innovation distribute asymmetrically; smaller orchestras cannot compete with the brand name and mass recognition of the Chicago Symphonies and the Berlin Philharmonics of the world. This is compounded by the fact that there is a limited classical repertoire for all orchestras to capitalize on. Looking at financial data, most symphonies without international recognition indeed make little revenue from their record sales. What about repertoire innovations? Many orchestras rightfully include room for new composers and modern works in their concert schedules, but their impact is mitigated in several ways. First of all, while these innovations increase demand for the orchestra, they do not necessarily make the orchestra more efficient. Second, the definition of “orchestra” constrains the scope and nature of these innovations. For instance, new repertoire cannot save orchestras from the costs of 80 full-time musicians. Finally, this repertoire has difficulty penetrating the “high culture” stigma of a symphony orchestra. It is the orchestral experience, not simply the music itself, that determines the audience base, and this overall experience is oftentimes just too elitist or stuffy for the average concertgoer despite innovative music.

The arts as a whole are productive - new phenomena like digital music, youtube, and ever-changing musical innovations continue to be profitable. If the arts were another business sector, there would be creative destruction - symphonies might have been phased out of most regions and reduced to a few large cities, as both managers and audiences go toward the more profitable. Yet the mission and nature of classical music and symphony orchestras today is one of preservation. The gap between costs and revenues (known as the "performance income gap") therefore continues to rise, and demand has so far only been able to fill it through philanthropy. While I don't presume to announce that the sky is falling atop the roofs of symphony halls, I will say that the financial operating environment of symphony orchestras is gradually changing, regardless of economic fluctuations like the current one.

(stay tuned for part 2)